§ 1400N. Tax benefits for Gulf Opportunity Zone
(a)
Tax-exempt bond financing
(1)
In general
For purposes of this title—
(2)
Qualified Gulf Opportunity Zone Bond
For purposes of this subsection, the term “qualified Gulf Opportunity Zone Bond” means any bond issued as part of an issue if—
(A)
(B)
such bond is issued by the State of Alabama, Louisiana, or Mississippi, or any political subdivision thereof,
(C)
such bond is designated for purposes of this section by—
(3)
Limitations on bonds
(A)
Aggregate amount designated
The maximum aggregate face amount of bonds which may be designated under this subsection with respect to any State shall not exceed the product of $2,500 multiplied by the portion of the State population which is in the Gulf Opportunity Zone (as determined on the basis of the most recent census estimate of resident population released by the Bureau of Census before August 28, 2005).
(4)
Qualified project costs
For purposes of this subsection, the term “qualified project costs” means—
(A)
the cost of any qualified residential rental project (as defined in section
142
(d)) located in the Gulf Opportunity Zone, and
(5)
Special rules
In applying this title to any qualified Gulf Opportunity Zone Bond, the following modifications shall apply:
(B)
Section
143 (relating to mortgage revenue bonds: qualified mortgage bond and qualified veterans’ mortgage bond) shall be applied—
(C)
Except as provided in section
143, repayments of principal on financing provided by the issue of which such bond is a part may not be used to provide financing.
(E)
Section
147
(d)(2) (relating to acquisition of existing property not permitted) shall be applied by substituting “50 percent” for “15 percent” each place it appears.
(6)
Separate issue treatment of portions of an issue
This subsection shall not apply to the portion of an issue which (if issued as a separate issue) would be treated as a qualified bond or as a bond that is not a private activity bond (determined without regard to paragraph (1)), if the issuer elects to so treat such portion.
(7)
Special rule for repairs and reconstructions
(A)
In general
For purposes of section
143 and this subsection, any qualified GO Zone repair or reconstruction shall be treated as a qualified rehabilitation.
(B)
Qualified Go Zone repair or reconstruction
For purposes of subparagraph (A), the term “qualified GO Zone repair or reconstruction” means any repair of damage caused by Hurricane Katrina, Hurricane Rita, or Hurricane Wilma to a building located in the Gulf Opportunity Zone, the Rita GO Zone, or the Wilma GO Zone (or reconstruction of such building in the case of damage constituting destruction) if the expenditures for such repair or reconstruction are 25 percent or more of the mortgagor’s adjusted basis in the residence. For purposes of the preceding sentence, the mortgagor’s adjusted basis shall be determined as of the completion of the repair or reconstruction or, if later, the date on which the mortgagor acquires the residence.
(b)
Advance refundings of certain tax-exempt bonds
(1)
In general
With respect to a bond described in paragraph (3), one additional advance refunding after the date of the enactment of this section and before January 1, 2011, shall be allowed under the applicable rules of section
149
(d) if—
(2)
Certain private activity bonds
With respect to a bond described in paragraph (3) which is an exempt facility bond described in paragraph (1) or (2) of section
142
(a), one advance refunding after the date of the enactment of this section and before January 1, 2011, shall be allowed under the applicable rules of section
149
(d) (notwithstanding paragraph (2) thereof) if the requirements of subparagraphs (A) and (B) of paragraph (1) are met.
(3)
Bonds described
A bond is described in this paragraph if such bond was outstanding on August 28, 2005, and is issued by the State of Alabama, Louisiana, or Mississippi, or a political subdivision thereof.
(4)
Aggregate limit
The maximum aggregate face amount of bonds which may be designated under this subsection by the Governor of a State shall not exceed—
(5)
Additional requirements
The requirements of this paragraph are met with respect to any advance refunding of a bond described in paragraph (3) if—
(A)
no advance refundings of such bond would be allowed under this title on or after August 28, 2005,
(c)
Low-income housing credit
(1)
Additional housing credit dollar amount for Gulf Opportunity Zone
(A)
In general
For purposes of section
42, in the case of calendar years 2006, 2007, and 2008, the State housing credit ceiling of each State, any portion of which is located in the Gulf Opportunity Zone, shall be increased by the lesser of—
(B)
Gulf Opportunity housing amount
For purposes of subparagraph (A), the term “Gulf Opportunity housing amount” means, for any calendar year, the amount equal to the product of $18.00 multiplied by the portion of the State population which is in the Gulf Opportunity Zone (as determined on the basis of the most recent census estimate of resident population released by the Bureau of Census before August 28, 2005).
(2)
Additional housing credit dollar amount for Texas and Florida
For purposes of section
42, in the case of calendar year 2006, the State housing credit ceiling of Texas and Florida shall each be increased by $3,500,000.
(3)
Difficult development area
(A)
In general
For purposes of section
42, in the case of property placed in service during the period beginning on January 1, 2006, and ending on December 31, 2010, the Gulf Opportunity Zone, the Rita GO Zone, and the Wilma GO Zone—
(i)
shall be treated as difficult development areas designated under subclause (I) of section
42
(d)(5)(C)(iii),[1] and
(6)
Community development block grants not taken into account in determining if buildings are federally subsidized
For purpose of applying section
42
(i)(2)(D) [1] to any building which is placed in service in the Gulf Opportunity Zone, the Rita GO Zone, or the Wilma GO Zone during the period beginning on January 1, 2006, and ending on December 31, 2010, a loan shall not be treated as a below market Federal loan solely by reason of any assistance provided under section 106, 107, or 108 of the Housing and Community Development Act of 1974 by reason of section 122 of such Act or any provision of the Department of Defense Appropriations Act, 2006, or the Emergency Supplemental Appropriations Act for Defense, the Global War on Terror, and Hurricane Recovery, 2006.
(7)
Definitions
Any term used in this subsection which is also used in section
42 shall have the same meaning as when used in such section.
(d)
Special allowance for certain property acquired on or after August 28, 2005
(1)
Additional allowance
In the case of any qualified Gulf Opportunity Zone property—
(2)
Qualified Gulf Opportunity Zone property
For purposes of this subsection—
(A)
In general
The term “qualified Gulf Opportunity Zone property” means property—
(ii)
substantially all of the use of which is in the Gulf Opportunity Zone and is in the active conduct of a trade or business by the taxpayer in such Zone,
(iii)
the original use of which in the Gulf Opportunity Zone commences with the taxpayer on or after August 28, 2005,
(B)
Exceptions
(i)
Alternative depreciation property
Such term shall not include any property described in section
168
(k)(2)(D)(i).
(ii)
Tax-exempt bond-financed property
Such term shall not include any property any portion of which is financed with the proceeds of any obligation the interest on which is exempt from tax under section
103.
(3)
Special rules
(6)
Extension for certain property
(A)
In general
In the case of any specified Gulf Opportunity Zone extension property, paragraph (2)(A) shall be applied without regard to clause (v) thereof.
(B)
Specified Gulf Opportunity Zone extension property
For purposes of this paragraph, the term “specified Gulf Opportunity Zone extension property” means property—
(ii)
which is—
(I)
nonresidential real property or residential rental property which is placed in service by the taxpayer on or before December 31, 2011, or
(II)
in the case of a taxpayer who places a building described in subclause (I) in service on or before December 31, 2011, property described in section
168
(k)(2)(A)(i) if substantially all of the use of such property is in such building and such property is placed in service by the taxpayer not later than 90 days after such building is placed in service.
(C)
Specified portions of the GO Zone
For purposes of this paragraph, the term “specified portions of the GO Zone” means those portions of the GO Zone which are in any county or parish which is identified by the Secretary as being a county or parish in which hurricanes occurring during 2005 damaged (in the aggregate) more than 60 percent of the housing units in such county or parish which were occupied (determined according to the 2000 Census).
(D)
Only pre-January 1, 2012, basis of real property eligible for additional allowance
In the case of property which is qualified Gulf Opportunity Zone property solely by reason of subparagraph (B)(ii)(I), paragraph (1) shall apply only to the extent of the adjusted basis thereof attributable to manufacture, construction, or production before January 1, 2012.
(e)
Increase in expensing under section
179
(1)
In general
For purposes of section
179—
(2)
Qualified section
179 Gulf Opportunity Zone property
For purposes of this subsection—
(B)
Extension for certain property
In the case of property substantially all of the use of which is in one or more specified portions of the GO Zone (as defined by subsection (d)(6)), such term shall include section
179 property (as so defined) which is described in subsection (d)(2), determined—
(3)
Coordination with empowerment zones and renewal communities
For purposes of sections
1397A and
1400J, qualified section
179 Gulf Opportunity Zone property shall not be treated as qualified zone property or qualified renewal property, unless the taxpayer elects not to take such qualified section
179 Gulf Opportunity Zone property into account for purposes of this subsection.
(f)
Expensing for certain demolition and clean-up costs
(1)
In general
A taxpayer may elect to treat 50 percent of any qualified Gulf Opportunity Zone clean-up cost as an expense which is not chargeable to capital account. Any cost so treated shall be allowed as a deduction for the taxable year in which such cost is paid or incurred.
(2)
Qualified Gulf Opportunity Zone clean-up cost
For purposes of this subsection, the term “qualified Gulf Opportunity Zone clean-up cost” means any amount paid or incurred during the period beginning on August 28, 2005, and ending on December 31, 2007, for the removal of debris from, or the demolition of structures on, real property which is located in the Gulf Opportunity Zone and which is—
For purposes of the preceding sentence, amounts paid or incurred shall be taken into account only to the extent that such amount would (but for paragraph (1)) be chargeable to capital account.
(g)
Extension of expensing for environmental remediation costs
With respect to any qualified environmental remediation expenditure (as defined in section
198
(b)) paid or incurred on or after August 28, 2005, in connection with a qualified contaminated site located in the Gulf Opportunity Zone, section
198 (relating to expensing of environmental remediation costs) shall be applied—
(h)
Increase in rehabilitation credit
In the case of qualified rehabilitation expenditures (as defined in section
47
(c)) paid or incurred during the period beginning on August 28, 2005, and ending on December 31, 2011, with respect to any qualified rehabilitated building or certified historic structure (as defined in section
47
(c)) located in the Gulf Opportunity Zone, subsection (a) of section
47 (relating to rehabilitation credit) shall be applied—
(i)
Special rules for small timber producers
(1)
Increased expensing for qualified timber property
In the case of qualified timber property any portion of which is located in the Gulf Opportunity Zone, in that portion of the Rita GO Zone which is not part of the Gulf Opportunity Zone, or in the Wilma GO Zone, the limitation under subparagraph (B) of section
194
(b)(1) shall be increased by the lesser of—
(2)
5 year NOL carryback of certain timber losses
For purposes of determining any farming loss under section
172
(i), income and deductions which are allocable to the specified portion of the taxable year and which are attributable to qualified timber property any portion of which is located in the Gulf Opportunity Zone, in that portion of the Rita GO Zone which is not part of the Gulf Opportunity Zone, or in the Wilma GO Zone shall be treated as attributable to farming businesses.
(3)
Rules not applicable to certain entities
Paragraphs (1) and (2) shall not apply to any taxpayer which—
(4)
Rules not applicable to large timber producers
(A)
Expensing
Paragraph (1) shall not apply to any taxpayer if such taxpayer holds more than 500 acres of qualified timber property at any time during the taxable year.
(B)
NOL carryback
Paragraph (2) shall not apply with respect to any qualified timber property unless—
(i)
such property was held by the taxpayer—
(I)
on August 28, 2005, in the case of qualified timber property any portion of which is located in the Gulf Opportunity Zone,
(5)
Definitions
For purposes of this subsection—
(A)
Specified portion
(i)
In general
The term “specified portion” means—
(I)
in the case of qualified timber property any portion of which is located in the Gulf Opportunity Zone, that portion of the taxable year which is on or after August 28, 2005, and before the termination date,
(j)
Special rule for Gulf Opportunity Zone public utility casualty losses
(2)
Gulf Opportunity Zone public utility casualty loss
(3)
Reduction for gains from involuntary conversion
The amount of any Gulf Opportunity Zone public utility casualty loss which would (but for this paragraph) be taken into account under paragraph (1) for any taxable year shall be reduced by the amount of any gain recognized by the taxpayer for such year from the involuntary conversion by reason of Hurricane Katrina of public utility property (as so defined) located in the Gulf Opportunity Zone.
(5)
Election
Any election under paragraph (2)(C) shall be made in such manner as may be prescribed by the Secretary and shall be made by the due date (including extensions of time) for filing the taxpayer’s return for the taxable year of the loss. Such election, once made for any taxable year, shall be irrevocable for such taxable year.
(k)
Treatment of net operating losses attributable to Gulf Opportunity Zone losses
(1)
In general
If a portion of any net operating loss of the taxpayer for any taxable year is a qualified Gulf Opportunity Zone loss, the following rules shall apply:
(2)
Qualified Gulf Opportunity Zone loss
For purposes of paragraph (1), the term “qualified Gulf Opportunity Zone loss” means the lesser of—